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The calls started coming in to Oregon's public universities five years ago about a worrying trend: New grads weren't buying houses and cars.

It was a significant departure from the graduates of decades past, for whom a degree was a solid bet on their own economic progress, one that would afford them a home, an elevated standard of living and a growing retirement account.

Their wages flowed to supermarkets and restaurants, movie theaters and furniture stores. Their taxes supported Portland parks and Medford streets and Salem police. And, ultimately, the state's general fund.

The recession skewed that trajectory. From 2008 to 2010, the downturn eliminated 147,700 jobs in the state and 8.8 million nationwide, while homeowners lost billions in wealth to falling home values and foreclosure. The turmoil reshaped the economy in lasting ways, reaching across generations and redefining the way millions lived, worked and envisioned the future.

Students streamed to college campuses, some hoping to wait out the economic slump, others for a chance at a new beginning. They sparked hiring and spending, providing a much-needed boost to college towns such as Corvallis and Eugene, and helped fuel one of the state's only growth industries during the economic slump.

But it was a boon built on the backs of students, one they'll shoulder for years, if not decades, to come. Oregon's bachelor-degreed students graduate, on average, more than $25,000 in debt.

Although the benefits of a higher education are unequivocal, both for the individual and the state, many say the weight of student debt could overshadow its gains, holding back the economy over the long haul. This year, for the first time, outstanding student loans topped credit card debt, and the balance is quickly closing in on $1 trillion nationally.

That's money that isn't flowing into the U.S. economy or stretching to all corners of the state. The prospect so rattled business and political leaders that they started calling the Oregon University System to better understand what was happening.

"They want to see our students as consumers," said Bob Kieran, assistant vice chancellor of institutional research and planning. "That's the big problem."

Costs, enrollments soar

The cost of a college degree has skyrocketed.

Public universities began relying more on students two decades ago as state funding eroded. It was a consequence of Measure 5, which limited property taxes and slashed Oregon's contributions to public universities from 10.7 percent of the general fund in 1991 to 4.9 percent by 2011.

As the economy weakened, enrollment at the state's seven public universities surged, shattering pre-recession projections. More than 100,000 students were registered at Oregon's public universities in 2011, about one-quarter more than in 2006. It was as if an entire new university had opened, Kieran said.

That pace slowed in the past year, but enrollment remains at record highs. So do student costs.

Tuition and fees came to 27 percent of the university system's funding in 2009, then shot up to 38 percent in 2011.

At that rate, Kieran said, public universities could eventually become as expensive as private colleges.

"I'm not going to say the sky is falling," he said. "But obviously if we're on a downward trend, and you ask me what's going to happen in the next 10 years, it's not going to be pretty."

At the University of Oregon in Eugene, tuition and fees have jumped more than 40 percent since 2007. Last year that came to $8,790 for in-state students; out-of-state students paid three times as much.

Borrowing stats followed suit. Student debt within state universities climbed 3 1/2 times faster than enrollment from 2004 to 2009, the latest year for which data were available.

That year students and their parents signed off on $532.1 million in loans. Grant aid was less than half that.

At Eastern Oregon University in La Grande, nearly 9 in 10 students graduated in debt in 2010, carrying $17,700 in loans on average. Portland State University's class of 2010 borrowed the most, more than $26,200.

It's a dangerous trend, said Tom Potiowsky, former state economist and current chairman of the economics department at PSU.

"(Students) are one of our better economic growth engines," he said.

Statewide, 2011 graduates racked up an average of $25,500 in debt, nearly 30 percent more than their 2007 counterparts. But they also walked into 9.5 percent unemployment and a tighter job market.

Oregon's average student debt ranks 21st in the nation, and its default rate 23rd. Of the 53,200 here who began repaying federal student loans in the fiscal year ended September 2010, some 8.3 percent were in default a year later, according to the U.S. Department of Education.

The rising debt all but shuts many new grads out of the housing market, Potiowsky said, limiting them to rentals. "Think of all the other purchases people cannot do because they have all that debt."

Debt vs. opportunity

Despite the debt load, there's no denying that an advanced education pays dividends, economists say. Anyone who earned a bachelor's degree in 2011 can expect to make $2.4 million during his or her career, according to the U.S. Census Bureau, compared with $1.4 million for a person with only a high school diploma.

"The only thing worse than going into debt for your college education is not going to college for your economic opportunity," Portland economist Joe Cortright said.

In the aggregate, that makes a big impact, he said. The more educated the workforce, the easier it is to grow and attract businesses to Oregon. That means more jobs and income tax revenues, which are especially important in a state operating without a sales tax, he said.

"The business part (of colleges) is sort of a nice little bonus," Cortright said.

If there was an upside to the recession, it played out in big college towns. Universities, public and private, that received federal student aid boosted hiring more than 10 percent from 2007 to 2011, according to the Oregon Employment Department.

By 2011 the schools employed 59,000 here, 22 percent more than a decade prior. By comparison, Oregon's overall jobs base ticked up 1 percent, still reeling from the economic downturn.

The impact was obvious. In Wilsonville the Oregon Institute of Technology filled a four-story, 131,000-square-foot building vacated by InFocus Corp., which had shed hundreds of jobs.

In Benton County, where Oregon State University employs 1 in 4 people, the unemployment rate is the lowest in the state, said Patrick O'Connor, a regional labor economist for the state.

"It's pretty clear what a huge stabilizer (OSU's) been to the economy," O'Connor said.

The price of for-profit

Expansion at state schools paled in comparison with their for-profit counterparts, which more than doubled their Oregon workforce, to 1,500, the past decade, data show. Yet those graduates typically owe more and earn less than their university-educated peers.

Such schools have become popular retraining options because of lower admission standards and shorter programs, which often last two years or less. Career Education Corp., which owns Sanford-Brown College and Le Cordon Bleu College of Culinary Arts in Portland, watched its profits double and enrollment jump 30 percent in the recession.

"They'll take students that wouldn't probably succeed in college otherwise, and they will hold their hand and get them through the program," said Jennifer Diallo, the director of Oregon's Office of Degree Authorization, which oversees for-profit schools.

Such colleges tend to attract low-income and nontraditional students, but often are more expensive, said Sandy Baum, a College Board economist. Students are much more likely to borrow large amounts and drop out than at universities, she said.

For example, a four-year graphic design degree at the Art Institute of Portland will cost $86,580, nearly three times that of UO.

The high-price, high-risk scenario has left many deep in debt, sparked class-action lawsuits and caught the attention of Congress. The federal government extends most all student loans.

Students of Le Cordon Bleu's culinary arts and chef training program, for example, posted a 23-to-1 debt-to-earnings ratio in 2011, according to federal data. Classmates in the baking and pastry program carried loan obligations that outweighed their earnings 19 times over. The associate's degrees cost more than $34,000 in tuition and fees, the school estimated.

Everest College, also in Portland, reported that five programs, including business management and medical assistance, had repayment rates below 25 percent.

Diallo said that mounting data have made it tougher for such schools to recruit. Sanford-Brown and two University of Phoenix campuses plan to close their operations in Oregon. Tightening regulations and talk of new loan standards are creating pressure on the industry.

"I really feel that the tide is turning," Diallo said.

The next step

The pressure extends to all forms of higher education.

When Gov. John Kitzhaber outlined an ambitious education plan in November 2011, he called it the "compass setting" that will guide Oregon's future. His 40-40-20 goal calls for 40 percent of Oregonians to attain a bachelor's degree and another 40 percent to earn a two-year or technical credential by 2025.

Now, though, a big hurdle stands in the way, one that will command the focus of state and business executives Monday at the Oregon Leadership Summit.

"I think our whole future as a state depends on how well we stay competitive with all education," said John von Schlegell, a venture capitalist and former member of Oregon's Higher Education Board. "It's not sustainable to continue to have the state de-invest in higher education and push the burden increasingly onto students."